New Stock Products Boost Nuveen Bank Sales

They may be late to the game, but they are catching up quickly.

That's what executives at John Nuveen Co. are saying about their entrance into the equity investments market.

For years Nuveen's bank sales suffered because the Chicago company was slow to capitalize on the stock market boom. But a new assortment of stock mutual funds helped such sales regain their 1993 level of $650 million last year, said Michael Forstl, manager of Nuveen's financial institutions group.

Furthermore the equity unit investment trusts, or UITs, that Nuveen rolled out in May 1997 have it on course to crack $1 billion in sales through banks, he said.

That's a big turnaround from a $350 million low in 1994 and 1995.

Getting brokers and investors to associate equity investing with a company known as the "grandfather of munis" is no small feat, Mr. Forstl said. But with muni bond funds out of favor with investors, the company has little choice.

"It takes time for people to recognize a firm in a different light," said Mr. Forstl, whose company manages $51 billion of assets over all, mainly for the retirement market.

Actually, observers say, Nuveen's bank-channel turnaround has been swift, given that the 100-year-old company only recently introduced alternatives to its conservative bond-based mutual funds and unit trusts.

Nuveen offered its first equity mutual fund in 1996 in a partnership with Institutional Capital Corp., a Chicago-based money manager in which it owns a stake. It now has five equity funds, including the European Value Fund, which was introduced last month.

Rittenhouse Financial Services, a Radnor, Pa.-based money manager that Nuveen bought last year, manages a blue-chip growth fund for Nuveen.

Nuveen did not introduce its first equity UIT until May of 1997. It now offers four.

"That is quite late," said Kenneth Kehrer, a consultant in Princeton, N.J. "It was in 1995 that a lot of these companies began changing" to equity products.

Nuveen is in the company of mutual fund firms like Kemper Funds, Colonial Group Inc., and Eaton Vance Corp. that have scrambled to add equity products to their offerings. The big difference is that Nuveen is well-known for its unit investment trusts.

The trusts differ from mutual funds in that they buy a limited number of securities, usually a dozen or so, and hold them until a specific maturity date.

Nuveen has plenty of relationships with big banks, including Citicorp, Chase Manhattan Corp., BankAmerica Corp., First Union Corp., Wells Fargo & Co., and First Chicago NBD. To help get its products on their preferred lists, Nuveen has added two bank wholesalers over the last year, for a total of 10, Mr. Forstl said.

Nuveen's business has changed dramatically over the past few years as sales of fixed-income unit investment trusts, once its core product, plunged.

Sales of UITs through all distribution channels dropped from $1 billion in 1995 to $757 million last year. But Nuveen's total investment product sales have been bolstered by managed accounts, of which it sold $1.2 billion last year, up from $346 million in 1995. (Nuveen does not do a significant business in managed accounts through banks.) The company had overall sales of $3 billion last year, up from $1.7 billion in 1996 and $1.6 billion in 1995.

Nuveen's sales through banks are split about fifty-fifty between mutual funds and UITs. To try to capitalize further on equity UITs, Nuveen is working out plans to offer them on a private-label basis to banks, Mr. Forstl said.

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